98/212/EC: Commission Decision of 16 April 1997 on the aid granted by Italy to Enirisorse SpA (Only the Italian text is authentic) (Text with EEA relevance)
Date: 1997-04-16
Institutions: European Commission
Subjects: Italy, State aid, exchange of information, holding company, industrial enterprise, industrial restructuring

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 16 April 1997

on the aid granted by Italy to Enirisorse SpA

(Only the Italian text is authentic)

(Text with EEA relevance)

(98/212/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community, and in particular the first subparagraph of
Article 93(2) thereof,

Having regard to the Agreement on the European
Economic Area, and in particular point (a) of Article 62(1)
thereof,

After giving notice to the parties concerned,
cordance with the aforementioned Articles,
their comments,

in ac-
to submit

Whereas:

I

By letter dated 15 January 1996 the Commission
informed the Italian Government of its decision to open
the procedure pursuant to Article 93(2) of the Treaty in
respect of aid given to Enirisorse S.p.A. and the group of
companies led by that company (hereinafter referred to as
‘Enirisorse’).

Enirisorse was 100 % owned by the Italian State holding
company ENI and was recapitalised with ITL 1 819
billion in the years 1992-1996. The Commission decided
to initiate the procedure with regard to those capital
injections. The Commission’s decision to open the pro-
cedure was published in the Official Journal of the Euro-
pean Communities,
inviting other Member States and

interested third parties to submit their comments on the
matter (1).

The Italian Government gave its reaction by letters of 3
July 1996, 5 August 1995, and 13 January 1997.

No other Member State nor
submitted comments to the Commission.

any interested party

II

In its answer to the letter initiating the procedure, the
Italian Government, while submitting detailed informa-
to the restructuring plan of Enirisorse, has
tion as
expressed the following general opinions:

(1) the recapitalisations were not undertaken by the State,
and public funds were not used for that purpose;

(2) the recapitalisations undertaken by ENI in favour of
Enirisorse pass the private-investor test and are there-
fore not State aid; and

(3) the recapitalisations possibly constituted State aid

compatible with the common market.

As to point (1), the Italian Government claims that the
recapitalisations were not undertaken directly by the State
but by ENI, and that operations by ENI in respect of its
subsidiary Enirisorse are not automatically attributable to
the Italian State.

The Italian Government observes that ENI was trans-
formed in July 1992 from a public economic body into a
public limited company. The ENI shares were held by
the Ministry of the Treasury.

(1) OJ C 102, 4. 4. 1996, p. 11.

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Furthermore, ENI was no longer subject to Government
directives.

In November 1995 the Ministry of the Treasury sold
15 % of the ENI shares for a total sum of ITL 6 300
billion on the stock markets of Milan, London and New
York.

All the recapitalisations were undertaken by ENI through
its own funds deriving from other ENI companies
operating in other sectors, and are consequently not
derived from State resources.

for

As to point (2), the Italian Government maintains that the
recapitalisations were caried out exclusively with ENI’s
own funds
financing a drastic
programme of closures, liquidations and restructuring of
companies and/or non-core activities. Furthermore, re-
capitalisation was the less costly option for the company,
as compared with composition proceedings.

the purpose of

The Italian Government argues that the behaviour as to
the recapitalisations was in line with the reasoning by the
Court of Justice of the European Communities in its
judgment in Case 303/88, Italy v. Commission (1). The
Court held that a holding company might, for a limited
period, bear the losses of its subsidiary in order to allow it
to cease operating under the best conditions. The Court
added that such a decision might be based not only on
the likelihood of an indirect material gain, but also on
other considerations, such as the safeguarding of
the
group’s image or the re-orientation of its activities.

is of

the Italian Government

the
In the alternative,
opinion, set out in point (3), that the recapitalisations
were compatible State aid within the meaning of points
(a) and (c) of Article 92(3), since they promote the long-
term development of disadvantaged regions
suffering
from industrial crisis and facilitate the restructuring of an
important economic activity without adversely affecting
trading conditions to an extent contrary to the common
interest.

An assessment of the recapitalisations in the light of the
Community guidelines on State aid for rescuing and
restructuring firms in difficulty (2)
‘the rel-
evant Community guidelines’) leads to the conclusion —
the Italian Government claims — that they are in line
with the requirements imposed by these guidelines.

(hereinafter:

III

Enirisorse was set up in 1991 as a non-operating holding
company, intended to optimise the economic and finan-

cial resources of the ENI Group and with the basic ob-
jective of entrusting the administration of the Group’s
holdings in the following activities to a single centre of
responsibility:

(a) mining of non-ferrous metals, extraction of pyrites
and its vertical integration to sulphuric acid, and the
coal mining operations of Carbosulcis, under
the
control of Agip Miniere (12 companies and 21
production sites);

(b) coal mining abroad, coke production in Italy and coal
and coke marketing both in Italy and abroad, under
the control of Agipcoal (25 companies and 11 produc-
tion sites);

(c) metallurgy of non-ferrous metals, under the control of
Nuova Samim (7 companies and 12 production sites);

(d) inorganic chemistry in the sectors of barium, boron
and chlorine/caustic soda/potash and of abrasives and
synthesized products, and research into advanced
materials, under the control of Samatec (5 companies
and 9 production sites).

ENI and its shareholder decided in 1991 to disengage
from the non-core business, so as to make the core busi-
ness profitable again by separating it from loss-making
activities and, finally, to sell the profitable parts.

To that end, Enirisorse formulated a plan of one-off aids,
involving a series of measures:

(a) for the activities formerly controlled by Agipcoal (coal
and coke), which were achieving generally satisfactory
economic results, a complete privatisation, entailing,
in the case of coke, closure of one production site
which would have enabled the best value to be
obtained from the activity;

(b) for the activites formerly controlled by Agip Miniere:

(1) the selling-off of those companies/holdings abroad
which were economically viable or otherwise of
interest to private operators;

(2) the liquidation, with the closure of production
sites, of all the mining activities in Italy, notwith-
standing the high cost of making good environ-
mental damage and of severance packages, since
these were activities in a state of structural loss
(mining of non-ferrous metals, pyrites and coal);

(3) the restructuring, at a modest investment cost, of
the sulphuric acid operation, which as a result
could be upvalued and sold off.

[1991] ECR I-1443, at paragraph 21.

(1)
(2) OJ C 368, 23. 12. 1994, p. 12.

(c) for the activities formerly controlled by Samatec (inor-

ganic chemicals and abrasives):

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(1) the liquidation of the activities with closure of the
production sites, in a state of structural loss (ab-
rasives);

Agipcoal South Africa, Agipcoal Australia, Carbones
del Guasare, Nuova Italiana Coke and other minor
companies);

(2) the selling-off of

the activities which could be
administered by other operators and whose closure
would, in any event, have entailed substantial costs
for making good environmental damage (barium,
artificial
boron,
diamonds);

chlorine/caustic

soda/potash,

(d) For

the activities

formerly controlled by Nuova

Samim (metallurgy):

(1) the selling-off of companies/areas of business
which had aroused evident interest on the part of
other operators and which would otherwise have
given rise to heavy liquidation/closure expend-
iture;

(2) the restructuring of primary metallurgy for the

purposes of subsequent privatisation;

(3) the liquidation of unsaleable marginal activities.

At the same time, Enirisorse planned to carry out a series
of company-rationalisation schemes, made possible by
concentrating other companies which had previously
headed its sectors or areas of the ENI Group in a single
centre of responsibility.

On the basis of this plan, the following action has been
taken:

(a) company reorganisation, the leading companies for
the various areas of operation (Agip Miniere, Agipcoal,
Nuova Samim, Terfin, Samatec) and other minor
etc) being
(Temav, Ardisia, Unicoke,
companies
merged by way of incorporation into Enirisorse. The
administration headquarters were reduced from 14 to
2; the associated staff were reduced from 650 to 216 as
of 31 March 1996;

(b) closure of a total of 16 uneconomical metallurgical,
miscellaneous and mining industrial sites which could
not be put back in order, and closure of 5 minor
metallurgical production lines;

(c)

liquidation of uneconomical mining and miscel-
laneous companies which could not be rescued from
the standpoint of the private operator (SIM, Carbo-
sulcis, Mineraria Campiano, Attivit(cid:133) Meridionali,
Simur and other minor companies) and of commercial
and financial companies that no longer served their
purpose (Nonfermet, Eurobatex, Nuova Samim Metals,
Agipcoal International and other minor companies);

(d) selling-off all companies and interests in operating
companies in the coal and coke sector (Agipcoal USA,

(e) selling-off/liquidation of all the inorganic chemicals
and abrasives companies (Societ(cid:133) Chimica di Larde-
rello, Societ(cid:133) Sali di bario, Eurosic, Supradiamant, Karl
Hertel);

(f) selling-off all the operations (companies and areas of
business) in the sector of aluminium (Sacal), secondary
(plants at Moncalieri, Pieve
processing of copper
Vergonte and Sulmona),
flue-gas pro-
cessing (Ponte Nossa) and secondary lead (plants at
Paderno Dugnano and Marcianise);

steel-works

(g) selling-off Comerint

training
services) and the company Manifatture Cotoniere del
Mezzogiorno.

(engineering

and

As a result of the sell-offs, the mergers by way of incorp-
oration into Enirisorse of companies no longer serving
any purpose, and the liquidation of companies,
the
number of companies still operating was reduced over the
period from 1992 to March 1996 from 60 to 3: Pertusola
Sud, Nuova Solmine, both controlled by Enirisorse, and
Enirisorse itself.

The number of production sites in operation has been
reduced from 56 to 5 as of 31 March 1996, of which three
are under the direct control of Enirisorse (integrated
complex of Portovesme/San Gavino: zinc and primary
lead; the Porto Marghera plant: copper; and the bronze/
brass division of Paderno Dugnano), one under
the
control of Pertusola Sud (Crotone: zinc) and one under
the control of Nuova Solmine (Scarlino: sulphuric acid).

The number of
jobs has fallen by 10 200 as of 31
December 1991 to about 2 800 as of 30 April 1996 (in-
cluding the employees of companies in liquidation or no
longer operational).

The companies mentioned above and the 5 plants consti-
tute the core business of Enirisorse (copper, lead, zinc and
sulphuric acid). Under the plan, the core business is to be
made profitable by selling and closing some of these
companies/plants, leaving only two production sites.

The current situation is as follows:

(a) the bronze/brass division of Paderno Dugnano has

now been sold;

(b) with regard to the Porto Marghera plant, a letter of
intent has been signed with a potential buyer;

(c) Pertusola Sud will either be closed and scrapped by
the end of 1997 or sold to an interested buyer who
will
turn the complex into a production unit —
probably for producing nickel.

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leaves

This
the production sites of Portovesme/San
Gavino (zinc and lead) and Scarlino (sulphuric acid) as the
final core business of Enirisorse.

(ii) ITL 160 billion to Carbosulcis;

(iii) ITL 115 billion to Samatec;

Over the five-year period 1992-96, Enirisorse will have
received from its shareholder, by way of recapitalisation,
ITL 1 819 billion, used to implement the plan.

Over the same period Enirisorse expects,
through its
selling-off of companies and areas of business, to receive
payment of about ITL 840 billion.

The breakdown of the receipts from sales is as follows
(including the estimated income from sell-offs now taking
place):

(i) ITL 454 billion deriving from selling-off the com-

panies in the coal and coke sector;

(ii) ITL 220 billion from selling-off

the participating
interests held in ENI International Holding, Sofid,
Padana Assicurazione;

(iii) ITL 107 billion from selling-off

the metallurgical

areas of business (formerly Nuova Samim);

(iv) ITL 113 billion to companies in the miscel-

laneous area (formerly Terfin);

(v) ITL 9 billion to minor companies.

(c) ITL 53 billion, for the restructuring of Nuova Somine,
undertaken in the period 1992-93, by way of
the
the pyrites extraction operations,
termination of
closure of the mines, commencement of activities to
repair environmental damage,
the
plants for
the production of sulphuric acid from
sulphur (with reduction of production capacity) and
redeployment or redundancy of surplus personnel.
Nuova Solmine, restructured on this basis, has been
producing profits from 1995: ITL 10 046 million in
1995, ITL 5 312 million in 1996 and is expecting ITL
7 057 million in 1997 and ITL 10 590 million in
1998.

reconversion of

(d) ITL 973 billion, for restructuring (including the losses
for the period) the metallurgical operations formerly
controlled by Nuova Samim and subsequently in-
corporated into Enirisorse. The payments for this
restructuring of metallurgical operations is broken
down as follows:

(iv) ITL 58 billion from selling-off minor companies in

the other sectors.

(1) ITL 93 billion to companies liquidated or sold off;

The total of the resources derived from payments by the
shareholder and income from the sales amounts to ITL
2 658 billion and is used as follows over the five-year
period:

(a) ITL 448 billion for reducing the initial indebtedness
of Enirisorse and Nuova Samim, merged into Eniri-
sorse, primarily towards the financing companies of
the ENI Group;

(b) ITL 822 billion to cover the deficit,

including the
previous losses, of
the mineral and miscellaneous
companies which have been placed in liquidation or
whose operating activities have ceased. The costs of
the liquidations relate primarily to the personnel costs
for employees retained until the date of departure, the
costs of redeploying or providing severance payments
to staff and environmental expenses (restoration of
sites and removal of slag).

(2) ITL 280 billion to Pertusola Sud (Crotone),

in-
cluding ITL 123 billion to cover maintenance
investments and operating losses (ITL 77 billion
for the two-year period 1992-93; ITL 33 billion for
the two-year period 1994-95; ITL 13 billion for
1996); the residue of ITL 157 billion being made
the extraordinary charges that appear in
up of
1992-96, including those allowed for the current
year (severance payments to personnel of ITL 26
billion, costs of slag removal and repair of environ-
mental damage of ITL 95 billion and devaluation
of sources of income ITL 36 billion);

(3) ITL 600 billion for the former Nuova Samim
metallurgical activities, including ITL 200 billion
for the extraordinary charges for the period (ITL
100 billion for voluntary redundancies and ITL
100 billion for environmental action), plus ITL
400 billion for the period 1992-1996 for operating
losses (ITL 243 billion) and investments (ITL 157
billion).

The breakdown of the necessary contribution to cover
the requirements of liquidation is as follows:

(i) ITL 425 billion to companies controlled by the
former Agip Miniere (SIM, SIMUR, Mineraria
Campiano, Agip Australia);

(e) ITL 362 billion to cover the general, financial and
extraordinary costs of the Enirisorse holding company.
Of this total, ITL 117 billion is attributable to extra-
ordinary charges
to
personnel) and ITL 245 billion to general costs and
financial charges.

(mainly severance payments

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To sum up: the restructuring of Enirisorse has mainly
entailed the abandonment of a large part of its activities,
involving the closure/liquidation of subsidiaries and sites
and the sale of subsidiaries and sites to third parties. The
restructured Enirisorse was then (in March 1996) based on
Pertusola Sud and Nuova Solmine, both controlled by
Enirisorse and Enirisorse itself. The number of produc-
tion sites had been reduced from 56 to 5. Enirisorse
controlled directly the integrated complex of Porto-
the Porto Marghera plant and the
vesme/San Gavino,
bronze/brass division of Paderno Dugnano; Pertusola Sud
controlled the Crotone production site and Nuova
Solmine the Scarlino site.

These production units together with the central manage-
ment constituted the core of the restructured Enirisorse.

In order to reach profitability a further shrinking of the
corebusiness is necessary. This will entail relinquishment
of the Marghera plant, the Paderno Dugnano plant and

Pertusola Sud. These plants and companies are to be sold
or closed in 1997. Only the Portovesme/San Gavino
production site (lead and zinc) of Enirisorse and the
sulphuric acid production by Nuova Solmine are to be
continued for the moment, although with the clear inten-
tion to privatise these as well.

The whole operation has diminished Enirisorse’s activities
significantly. This is illustrated by the reduction of the
annual turnover of the group: from ITL 1 867 billion in
1992 to ITL 810 billion (expected) in 1997.

A reduction of capacity has also taken place for the core-
business and is still continuing. This is demonstrated by
the following tables on the evolution of the production
capacity for lead, zinc, copper and sulphuric acid and on
the employment situation in these sectors:

Evolution of production capacity

1992

1993

1994

1995

1996

1997

(*) (1)
(*) (2)

(*)

(*)

(*)

(*)
(*)

(*)

(*)

(*)

(*)
(*)

(*)

(*)

(*)

(*)
(*)

(*)

(*)

(*)

(*)
(*)

(*)

(*)

(*)

(*)
—

(*)

—

(*)

Lead

Zinc

Copper (3)

Sulphuric acid

(*) Business secrets (Text omitted at request of Italian Government).
(1) Primary.
(2) Secondary.
(3) Copper cathodes, alloys and tubes.

Lead

Zinc

Copper

Sulphuric acid

Evolution of the employment situation

1992

1993

1994

1995

1996

618

564

513

442

297

1 636

1 542

1 398

1 310

1 284

518

346

558

274

345

252

318

209

202

187

Total

3 118

2 938

2 508

2 279

1 970

The restructuring efforts described above have resulted in a substantial decrease in Enirisorse’s
losses. For an overview of the fall of losses, see the table below:

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Normal business
activity

Extraordinary costs
resulting from restructuring

Total

(ITL billion)

(*)

(*)

(*)

(*)

(*)

(*)

1992

1993

1994

1995

1996

1997

1998

1999

(*)

(*)

(*)

(*)

(*)

(*)

(*)

(*)

(*)

(*)

(*)

(*)

(*)

(*)

(*)

(*)

(*) Business secrets (Text omitted at request of Italian Government).

The loss of ITL 48 billion in 1997 is caused by Pertusola
Sud producing zinc. This company will either be closed
or sold to an interested buyer in 1997. The potential
buyer, if the sale goes ahead, is planning to turn produc-
tion away from zinc and into nickel. Also for Portovesme,
a binding offer has been received from a potential buyer.
In the case of Nuova Solmine negotiations are taking
place with the prospective buyer.

transaction would not have been undertaken by a private
investor operating under normal market economy condi-
tions.

On the basis of the information provided to the Commis-
sion, the amount invested by the Italian State, through its
in Enirisorse amounts to ITL
holding company ENI,
1 819 billion for the five-year period 1992-1996.

Forecasts on Portovesme/San Gavino, lead and zinc, and
Nuova Solmine, sulphuric acid, are looking good. Nuova
Solmine has been making profits over the past years and
is expected to continue its profit-making line. Prospects
for the lead and zinc production of Enirisorse are also
satisfactory. World forecasts for these products in terms of
prices, consumption and diminished stocks are positive
for the coming three years. After that the cycle takes a
more downward trend. In 1997 a profit of ITL 11 288
billion is expected, in 1998 ITL 49 675 billion, in 1999
ITL 80 710 billion and in 2000 ITL 47 046 billion.

Until very recently 100 % of the shares of ENI were held
by the Italian Ministry of the Treasury. The meeting of
the shareholders, namely the Ministry of the Treasury,
appointed the board of directors of ENI, in accordance
with Italian civil law. One of the members of the board is
an official of the aforementioned Ministry. This was the
situation in 1991/1992 when the decision to restructure
Enirisorse was taken.

The capital injections have been financed by proceeds
that otherwise would have benefited the shareholder of
ENI, the Italian State.

IV

Consequently, the funds that ENI has made available to
Enirisorse are considered to be State resources within the
meaning of Article 92(1) of the Treaty.

In order to ascertain whether State aid is included in the
recapitalisations, the Commission examines the flow of
capital between the Italian State, the ultimate shareholder,
and Enirisorse in the light of the marker-investor prin-
ciple as set out in the Commission’s communication to
the Member States on public undertakings (1). According
to this principle State aid is involved if the financial

(1) OJ C 307, 13. 11. 1993, p. 3.

The injections of capital made by ENI with the intention
of financing the restructuring process of Enirisorse suffer
from a lack of sufficient financial return on these injec-
in essence, of
tions, since the restructuring consists,
outright privatisations,
and privatisations
following investments. A profitable return in relation to
the amount of the recapitalisation was therefore not to be
expected. Because of
this lack of sufficient return it
cannot be claimed that ENI acted as a private investor.

liquidations

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Also, Enirisorse has suffered heavy losses over more than
five years. This is, in terms of the Court’s judgment in
Case 303/88, Italy v. Commission (1), too long a period to
be classified as limited in time. A private operator would
have restructured or liquidated Enirisorse at an earlier
stage in order to avoid an ongoing cumulation of losses.

Enirisorse was active in different sectors, like mining of
non-ferrous metals, coal, cokes, lead, zinc, metallurgy of
non-ferrous metals and inorganic chemicals. These sectors
or products are traded within the Community and even
on a global scale. An injection of ITL 1 819 billion into
Enirisorse threatens to distort competition and affects
intra-Community trade.

It should therefore be concluded that the total amount of
the recapitalisations in the years 1992-1996 constitute
State aid within the meaning of Article 92(1) of the Treaty
and Article 61(1) of the EEA Agreement.

(2) it must avoid unduly distorting competition;

(3) it must be in proportion with the restructuring costs

and benefits;

(4) it must be fully implemented;

(5) it must be subject to monitoring and reporting re-

quirements.

Only if these basic requirements are fulfilled may the
effects of the aid be considered to be in keeping with the
common interest under point (c) of Article 92(3) of the
Treaty.

1. Restoration of viability and privatisation

Article 92(2) and (3) of the Treaty define certain types of
State aid that are compatible with the common market.

As a general rule, the conditio sine qua non of all restruc-
turing plans is that they must restore long-term viability
and health to the company in question.

Given the nature of the operation, Article 92(2) and (3),
point (b), of the Treaty is not applicable to the State aid in
question. Given the diversity of the group’s operation and
locations, and since the financial measures have no re-
gional objective, only the derogation under point (c) of
Article 92(3) of the Treaty, in so far as it concerns aid to
facilitate the development of certain economic activities,
could be taken into consideration.

The recapitalisations have been made available to Eniri-
sorse to finance a restructuring project envisaging a final
liquidation of Enirisorse.

The Commission’s approach to State aid for restructuring
is outlined in the relevant Community guidelines (2).

In those guidelines, the Commission has pointed out that
it takes a strict approach in assessing the compatibility of
this kind of aid, since it might otherwise end up by trans-
ferring without reason social or industrial problems from
one Member State to another.

For this reason, before the Commission will approve
its restructuring must
restructuring aid to a company,
satisfy the following basic conditions:

(1) it must restore the long-term viability of the company

within a reasonable time;

[1991] ECR I-1443, at paragraph 21.

(1)
(2) OJ C 368, 23. 12. 1994, p. 12.

In the case of Enirisorse the restructuring plan was
aiming at liquidation of companies through closure, sale
and restructuring, followed by privatisation.

As has been shown, these measures have resulted in an
important decrease of the losses of Enirisorse over the
years in which the plan has been executed: for ordinary
business activity,
the losses declined from ITL 551,2
billion in 1992 to ITL 98,6 billion in 1996. The expected
loss of ITL 48 billion in 1997 is attributed to the zinc
producer Pertusola Sud, which will either be closed and
scrapped in 1997 or sold to a buyer that has expressed
interest. It will, however, not produce zinc any more. One
of the reasons for opening the procedure was the prelim-
inary conclusion of the Commission that the financial
situation of Enirisorse had not been rectified after various
liquidations and sales of companies. This was true at the
time of opening the procedure, but the restructuring was
at that time still in progress and had not yet yielded all its
benefits. As has been said, the financial situation of Eniri-
its
sorse has changed considerably in the sense that
indebtedness has decreased and that the only loss-making
activity left (the zinc producer Pertusola Sud) is to be
privatised in the course of 1997. After this privatisation,
Enirisorse will be composed of only Portovesme and
Nuova Solmine, both profit-making entities.

Enirisorse has thus managed to part from all its non-core
business activities and is now still engaged in the process
of reducing the size of the core-business. It has been able,
thanks to this process, to reduce its debts and with the
selling or closing of Pertusola Sud it will have shed its last
loss-making company.

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It is also shown by the Italian authorities that the restruc-
turing has not stopped short of the ‘core business’ of
Enirisorse, as was asserted at the time of the opening of
the procedure. After the first phase of abandoning a large
part of its activities, Enirisorse consisted of only three
companies that were considered to be the core business.
The process of privatising these companies is under way
and will be completed in the near future. In fact, after the
the Porto Marghera plant and the Paderno
sale of
Dugnano plant together with the company Pertusola Sud,
the remaining core business is profitable. It therefore no
longer holds true that
the core business is draining
resources from ENI. The restructuring effort made vis-
(cid:133)-vis the core business has had repercussions in terms of
reduced production capacity and reduced levels of
employment.

Enirisorse, and it held the view, on the basis of the in-
formation available at the time, that the restructuring had
had no effect on these activities of Enirisorse. In its
answers to the opening of
the procedure the Italian
Government has pointed out that the restructuring also
involved the core business, giving consistent reductions:
lead was reduced by 45 %, zinc by 40 %, copper by
100 % and sulphuric acid by 38 %.

The reduction in personnel working in these sectors has
also been remarkable: for lead from 618 in 1992 to 297 in
1996, for zinc from 1 636 in 1992 to 1 284 in 1996, for
from 518 in 1992 to 202 in 1996, and for
copper
sulphuric acid from 346 in 1992 to 187 in 1997.

the two remaining companies. In fact

In addition, the Italian authorities have communicated to
the Commission their commitment to carry out a privat-
isation of
the
process of privatising them has been launched and
binding offers have been received from the interested
buyers. These are private companies. After completion of
these privatisations Enirisorse will be liquidated, contrary
to the assumption made at the time when the procedure
was initiated, when it was not clear whether or not the
restructuring would lead to a continuation of Enirisorse’s
activities. In these circumstances of full privatisation and
a total liquidation of Enirisorse, it will be the task of the
new owners to ensure the ultimate viability of the com-
panies concerned, without State assistance.

The privatisation will result in a severing of the direct
financial links between Enirisorse and the Italian State
and subsequently the companies will no longer enjoy
constant State financing.

2. Prevention of undue distortion of competition

A further condition set on restructuring aid is
that
measures are to be taken to offset, as far as possible,
adverse effects on competitors. Otherwise, aid would be
contrary to the common interest and not eligible for the
exemption under point (c) of Article 92(3) of the Treaty.

In the light of the above, the Commission concludes that
the restructuring of Enirisorse will not affect competition
to an extent contrary to the common interest.

3. Proportionality of

the aid in relation to the

restructuring

As has been shown, the capital injections made over the
past years have been used to cover the costs related to
reducing the indebtness of Enirisorse, the liquidation and
closure of companies and plants, and the restructuring of
several other companies and plants.

It is noted that the beneficiary contributed significantly to
the financing of the restructuring and liquidation plan by
using the income it derived from the sale of assets and
subsidiaries for those very purposes. Doubts existed at the
time of opening the procedure as to the existence of these
contributions. The Commission has received full con-
firmation from the Italian Government that the income
derived from the sales has been used to co-finance the
other elements of the restructuring. As has been demon-
strated, the total costs for the restructuring so far are ITL
2 658 billion. Enirisorse has been able to pay for these
costs through capital injections amounting to ITL 1 819
billion and through the sales proceeds amounting to ITL
840 billion. The costs of the restructuring would not have
been met if Enirisorse had not used the income from the
various sales for the restructuring purposes. The final
privatisation of Enirisorse’s restructured business area will
contribute further to these costs. This contribution is the
maximum possible to be given by the beneficiary.

Enirisorse’s restructuring represents a considerable effort
to reduce its productive capacity across its product range.
Figures on the annual turnover, which went from ITL
1 867 billion in 1992 to ITL 810 billion in 1997, are a
clear expression of such a reduction. When opening the
procedure, the Commission was not aware of the massive
reductions of capacity planned for the core business of

Under these circumstances, the aid granted may be con-
sidered not to provide Enirisorse or its still operating
subsidiaries/plants with surplus cash which could be used
for aggressive, market-distortive activities unrelated to the
restructuring process, nor to finance new investment not
required by the restructuring.

L 80/40

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EN

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Official Journal of the European Communities

18. 3. 98

4. Full implementation of restructuring plan

Article 2

One of the other conditions imposed by the relevant
Community guidelines is that the company must fully
the restructuring plan submitted to and
implement
accepted by the Commission. As has been described, this
plan consists in selling and liquidating most of
the
companies owned by Enirisorse, the restructuring of the
core-business of Enirisorse in order to privatise the rel-
evant companies, followed by the privatisation of these
companies and, finally, the liquidation of Enirisorse. The
Italian Government has undertaken to carry out this plan
in its entirety. The Commission concludes therefore that
this condition will be complied with by the Italian
Government.

5. Monitoring and reporting

The further implementation of the privatisation underway
(Pertusola Sud) and the privatisations of Portovesme/San
Gavino and Nuova Solmine are to be monitored by the
Commission. For this purpose, periodic reports will have
to be submitted by the Italian authorities concerning the
progress of those privatisations, the financial situation of
Enirisorse and the income derived from the privatisations
as such,

HAS ADOPTED THIS DECISION:

Italy shall comply with its commitment to privatise the
remaining companies and production sites of Enirisorse
S.p.A. and to commence the final liquidation of Enirisorse
S.p.A. The privatisations shall take place by 31 December
1998. The proceeds obtained by these privatisations shall
not be used to invest in other companies owned by ENI
but shall be used to defray any further liquidation costs of
Enirisorse S.p.A.

Article 3

1.
Italy shall cooperate fully with the monitoring of
this Decision by the Commission, and shall provide the
Commission with half-yearly reports, including in par-
ticular:

(a) the progress of the outstanding privatisations and the

proceeds derived from them;

(b) the progress of

the final

liquidation of Enirisorse

S.p.A. and any further liquidation costs;

(c) an update on the financial situation of Enirisorse

S.p.A.

The first report shall reach the Commission by
shall be

2.
1 October 1997 and the reports
submitted at six-monthly intervals.

thereafter

Article 1

Article 4

The State aid granted by Italy in the period 1992 to 1996
in favour of Enirisorse S.p.A., in the form of recapitalisa-
tions amounting to ITL 1 819 billion and aimed at its
restructuring in accordance with the plan is compatible
with the common market and the EEA Agreement by
virtue of point (c) of Article 92(3) of the Treaty and point
(c) of Article 61(3) of the Agreement, provided that the
Italian Government complies with the conditions laid
down in Articles 2 and 3 of this Decision.

This Decision is addressed to the Italian Republic.

Done at Brussels, 16 April 1997.

For the Commission

Karel VAN MIERT

Member of the Commission